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Consumer Alert

With the big demand of debt relief in the last couple of years due to the bad economy, legitimate-looking fraudulent companies are popping up everywhere offering to easily settle your debts…and eager to take big upfront fees and disappear. Other debt relief companies are either too inept or too inexperienced to negotiate effectively, providing you little help while collecting your hard earned money every month. Either way, the result is the same: your money down the toilet at a time when you cannot afford the loss.

One of the main reasons for the ease of fraud is the lack of regulation. The federal government has minimal regulation of the debt relief industry, although the Federal Trade Commission is recommending new rules and regulations. Few states regulate the industry, and where those states are, the debt-settlement companies aren't. So it's "buyer beware."

Some common scams circulating now offers to legally erase your debt with documents you purchase from them for a hefty fee. Another is based on the bogus "no money lent" argument, where the claim is made that credit card banks cannot loan money legally. The con artists claim that credit card banks are actually operating illegally, and so you never really borrowed any money when you used your credit cards, so you don't really need to pay anything back. You just have to follow their system and the debts will go away because the banks don't want this knowledge disclosed to the public!

How to tell the difference between scams from legitimate options? Things to be alert and watch for:

  • Promises to clean up your credit report. This is misinformation as late or skipped payments stay on your credit report for years. Only time and a steady pattern of repayment, or the elimination of debt can improve your credit rating.
  • Quick Loan Forgiveness: Student loan debt relief companies say that all you need to do is make x number of payments to them and then all of your student debt will be forgiven. That is not how the forgiveness plans work: you need to be enrolled into an IBR program for either 10 years or 20 years, and then IF you have a balance left over at the end, then its forgiven.
  • Instant enrollment over the phone with a credit card without any qualifying process or faxing them anything. Be leery of any company willing to enroll you without seeing your creditors information, that would include a recent statement, bill or invoice.
  • Avoid giving your social security number, this is not needed. A legitimate debt settlement company will ask for the names of your creditors, the amount owed, and the interest rate.
  • You should be told all positives and negatives of the program if you are to make an informed decision.
  • Look carefully for hidden fees. Read all the fine print and make sure you do not sign any document or agreement until you have looked it over carefully or with a friend, family member or professional.
  • Be cautious if a company claims that as a part of their services, they guarantee to stop all creditor phone calls, and/or your credit will not be altered.

If you have become the victim of a debt elimination scam, demand a refund in writing and threaten to complain to the Better Business Bureau where the company is located (assuming you can even find them), your state Attorney General, the FTC, and ripoffreport.com. And then get on the phone with your creditors and explain that you were misled and that you would like to work things out in good faith. If you get your money back, then contact the above references.

Here are a few debt settlement companies that have been or currently are the subject of subpoena by various state attorney offices:

  • American Debt Foundation Inc.
  • American Financial Service
  • Allegro Law Firm.
  • ADA Tampa Bay, also known as American Debt Arbitration, of Tampa
  • Credit Answers LLC CSA - Credit Solutions of America Inc.  
  • Clear Financial Solutions affiliate CSTR Solutions Inc. which also operates as APR Group Services and Advance Account Services of Orlando, FL
  • Debt Remedy Solutions LLC
  • Debt Settlement America
  • Debt Settlement USA
  • Debtmerica Relief
  • DMB Financial LLC
  • Enterprise Technology Group, Inc,., doing business as Ameritrust Financial Card.
  • Equity First Financial Corp., of Casselberry.
  • FGL Clearwater, Inc. d/b/a American Debt Arbitration
  • Freedom Debt Relief
  • Financial Freedom Resources, Inc., of Clearwater
  • IXE Accelerated Financial Services
  • Moneyworks LLC of Smyrna, GA
  • Nationwide Asset Services Inc., of Phoenix, and its affiliates
  • New Leaf Associates, LLC. 
  • New Era Debt Solutions
  • New Horizons Debt Relief Inc.
  • Nodelay Enterprises, Inc., also known as Nodelay Account Services, of Orlando
  • Preferred Financial Services Inc
  • Priority Direct Marketing of Spokane, Wash., and Bedford, Texas
  • Provident Financial Services, Inc., also known as Future Financial Direct, Inc.
  • ServiceStar LLP
  • Specialized Funding, of Largo
  • United Debt Solutions
  • United Debt Solutions, Inc.
  • Universal Debt Reduction, LLC
  • U.S. Financial Management Inc., which operates under My Debt Negotiation

Report a bad debt company at ripoff@NDCenter.org

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